Pennsylvania paycheck calculator

How Pennsylvania taxes wages

Employers multiply each paycheck's Pennsylvania-taxable compensation by the flat rate. There is no state withholding certificate to fill out for allowances, and filing status and dependents do not change the amount withheld.

Pennsylvania compensation is not the same as federal taxable wages. Your traditional 401(k), 403(b) or 457 deferrals are taxed when you contribute them, so Box 16 of your W-2 is usually higher than Box 1. Health, dental and vision premiums paid through a qualified Section 125 plan are excluded, and so are HSA contributions made through your employer's cafeteria plan. Dependent care set-asides are taxable.

A bonus is simply added to the pay period's compensation and taxed at the same flat rate. Lower-income households can get some or all of the tax back through Tax Forgiveness when they file, but withholding does not account for it.

Local earned income tax and Local Services Tax

Under Act 32, your employer withholds the earned income tax for the municipality and school district where you live, or the nonresident rate where you work if that is higher. The combined resident rate varies widely, from zero in a few townships to several percent in cities such as Reading and Scranton. The tax is figured on the same compensation as the state tax, so 401(k) deferrals are included.

The Local Services Tax is a flat yearly amount for the privilege of working in a municipality, taken in equal slices from each paycheck. Most places charge the standard maximum, but a few distressed cities such as Harrisburg and Scranton are allowed more. People who earn less than the local exemption threshold do not owe it.

Rates in this calculator come from the Department of Community and Economic Development's official register. To find the exact rate for your address, use DCED's PSD code lookup; your employer needs that six-digit code.

Philadelphia Wage Tax

Philadelphia is not part of the Act 32 system. It levies a Wage Tax on residents wherever they work and on nonresidents who work in the city, and it taxes gross pay: pre-tax health premiums, 401(k) deferrals, HSA and FSA contributions are all included. The city has no Local Services Tax.

Wage Tax rates change each July 1 under a multi-year plan to lower them, so a calendar year mixes two rates. The calculator blends the two 2026 rates evenly across the year. Low-income residents who qualify for Pennsylvania Tax Forgiveness can apply for an income-based Wage Tax refund.

Unemployment Compensation withholding and reciprocity

Pennsylvania is one of the few states where employees pay into unemployment insurance. The employee rate applies to all gross wages with no cap, so it never stops during the year.

Pennsylvania has reciprocal agreements with Indiana, Maryland, New Jersey, Ohio, Virginia and West Virginia. A Pennsylvania resident working in one of those states has Pennsylvania tax withheld instead of the other state's, and residents of those states working in Pennsylvania can file a certificate to skip Pennsylvania withholding.

What changed recently

• 2026: Philadelphia lowered its resident and nonresident Wage Tax rates again on July 1, 2026. Source
• 2026: The employee Unemployment Compensation withholding rate stayed the same for 2026, and it still applies to all gross wages. Source
• 2025: Philadelphia cut its Wage Tax rates on July 1, 2025, the first step of a five-year reduction plan approved by City Council. Source
• 2025: Pennsylvania created the Working Pennsylvanians Tax Credit, a state earned income credit claimed on the PA-40 return. Source